Mark we will discuss that. And speaking in the nexty hour. And getting real on the rally. Our stock valuations getting [inaudible] says yes. Every bit of good news seems to be incorporated into the market rises right now. There is not a lot of room for bad news. Matt we are less than half an hour away from the european open. We will see how european stocks do this morning. Futures are pointing to a positive open. We do see green on the screen when we look at equity index futures. The interesting thing i think to look at his treasuries. We saw yields creeping up toward 2. 6 percent again today. I have a threeday chart of the u. S. 10 year and you can see we are almost there. Not quite at the level. 0 on treasuries. To computer is rounding up 2. 6. We know better. Tom keene taught me to go out four significant digits. They are significant. Lets see what is happening on the gmm. Wonder whether the bund is going to be the tail wagging the dog today on the treasury market. Keep an eye on that. We will bring you headlines from that. The rally in the states continues. The apple story is interesting but the banks continue to be a big focus. We will watch it. Goldman sachs is worth less than Morgan Stanley. We will talk about that and the barclays story later on. It is making changes as well. Europe a less solid session. Andet to the mliv team edits you on what is happening with the treasury market. It could be seen what is going on with the dollar as part of the ecb same as well as we work our way to word toward the ecb meeting. A lot to think about. The euro is the bulk of the index. The pound trading softer against the dollar. Lets see what is happening in commodities. Off, it was a windy night in the u. K. , it is weather related. Lets get a first word news update. Juliette chinas economy has filled its first year acceleration since 2010. Growth picked up six. 9 from 6. 7 . Industrial production rose beating estimates but retail sales missed forecast and fixed Asset Investment climbed the least the century. Sanders saidry trump will support the plan to temporary government funding ahead of the shutdown deadline. Some cloutpaul ryan as he tries to bring a little reluctant conservatives on board. Has Republican Leaders are pressing had with a plan to avoid a shut down by funding the government for four more weeks but shutting out democrats and their demands for a deal on immigration. Bitcoins roller coaster start to 2018 has seen more wild moves over the last 24 hours, plunging below 10 thousand dollars for the first time in six weeks before bouncing, then resuming its slide. The gyrations took the worlds biggest Digital Currency across a range of 2600. Its low point pushed a month loud right month long route topping 50 . From a yearp 1000 ago. In japan a small shift is taking place in internal discussions with a minority raising the need to start discussing policy normalization. That is even though they are agreeing that the current Stimulus Program must continue unchanged for some time. According to people familiar with talks at the central bank, some of them think the changes natural even the improvement in the economy. Nestle wants to sweeten japans valentines day with ruby chocolate cake catch as it chooses one of the worlds most confectionery obsessed markets. The company struck at deal with [indiscernible] flavor thatl berry is sour yet sweet. Sale as well as online. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy and matt. Matt thanks very much. Bill may have changed the tone for the dollar, the bloomberg dollar index rebounded after hitting a threeyear low yesterday. Is tax repatriation the things that buoyed the dollar bounceback . Back 200 billion in cash necessitates transferring your currency into dollars. Is that one of the reasons for the rebound . It seemed toly change the sent to meant sentiment. Apple has a lot of stores on sure. It does not hold just treasuries. It holds a lot of corporate securities. Both treasury yields picked up and the dollar rallied. I do not know if there is a necessity for the dollar to react apart from the sentiment shift. Belief that a lot of these assets are in u. S. Dollars. It may not result in a conversion into the actual u. S. Dollar. It has changed the sentiment on and helped people have sympathy for the dollar. Bottomedr might have out yesterday. And ihe treasury market, am not just talking about apple, i am talking about a bunch of companies to you they are holding these offshore assets. Mainly in dollars but mainly in treasuries as well. Couldanother element that get the treasury market moving on the downside. It is another tailwind that could be pushing things lower. What people were trading off yesterday. That will not be the case over the longerterm. It might help the yields spike at up. Apple is a great case in point. Im am sure it is corporate Debt Holdings bluffing its Treasury Holdings. Insee the reaction treasuries it does not seem to follow through. This should be negative for both Corporate Holdings and Treasury Holdings or should not be negative for Treasury Holdings. The story has been slightly mistaken and the shortterm reaction. There is a little bit of upward momentum in u. S. Treasury yields and people are picking the story to fit the price action. Matt if you are selling treasuries that must mean you have other plans for the cash, otherwise you might as will hold treasuries when you bring it back to the u. S. Apple says it will invest 30 billion over the next five years. Tax cut, tax reform bill is going to sincerely boost Capital Expenditures . Mark there is some positive signs in that regard. It would be foolish to dismiss them. It can be argued about how much will boost growth and how much will boost capex but it is a genuine boost. People dismiss it as an equity story are missing the picture. It is mainly an equity story and boosting corporate earnings but tick in wagesler and smaller capex. I think there is a slight positive cycle in the u. S. And that helps the idea that the u. S. Looks like it will grow faster than most of the g10 countries even though it did not last year. The narrative seems to be the exact opposite. Guy the [indiscernible] speaks in 20 minutes. Mark he is a notorious hot. The whole market is bullish the euro. Nbelievable the feedback i got yesterday. The main argument was this ridiculous euro is going higher. They did not believe the euro could pull back and that was internal and external. People believe in the euro story. One of the elements is people expect him to talk hawkish lee. If the euro cannot rally it is looking negative for the ecb. Draghi will air on the dovish err on the dovish side especially given the comments of the last few days. Teamyou can follow the mliv and tliv. You can mention we have we have a statement coming from undervalued for the company. Next, market cap has fallen below Morgan Stanleys for the first time in eight decades. We will discuss anchor earnings and job cuts at barclays. That is next. This is bloomberg. Matt welcome back to Bloomberg Markets. This is the european open. Lets get the Bloomberg Business flash. For that we go to juliette saly. Juliette apple has said it will return hundreds of billions of overseas dollars to america. Payiphone maker plans to 38 billion in taxes on the money and spend tens of billions on domestic jobs, manufacturing, and data centers in the coming years. According to people familiar, apple told employees it is issuing stockbased bonuses with two point 5,000 each. The Worlds Largest asset manager blackrock is offering unlimited time off. They want to provide a benefit that is considered appealing to younger workers used to more casual and flexible environments. Trying to transform it into a more technologically form focused firm. The latest move should help it compete against Silicon Valley rivals. That is your Bloomberg Business flash. Guy thank you. Barclays is eliminating 100 Senior Investment staff position overhauls its underperforming divisions. Moret cap has fallen in than a decade after posting earnings yesterday. There is a great chart that shows you this ratio going over the last 10 years which we can pop up for you and we will post the number for you. A nice little chart to start your day if you have to be on the right side of that trade. Joining us now, dani burger. They have been talking such a big game at barclays for quite some time. How does this fit with that narrative . The he is the head of Investment Banking division. He says he sees a division that is not taking as much risk as its u. S. Rivals and they are falling behind. He wants to get up there. You have this hiring spree where they higher Top Hedge Fund performance in that he says he this wast cutting, last year, differentiating between the top and bottom performers. Their stock is fallen 14 . Investors not quite pleased with what they are seeing. He is under a lot of pressure to turn the ship around. Reporting from bloomberg shows they have cut 100 senior positions, they are about to cut 100 seen a physician trim the Investment Bank, trying to turn the ship around. Guy no one knows about it yet. Matt i wonder how this helps. If you are a young banker in the city, do you want to go to a company that has fired why hundred people and making it harder to get paid . Dani i love we have ought the flatday that blackrock is offering unlimited vacation leave and you have barclays saying it is going to hire some of its Top Investment bankers. A story of trying to attract talent. Already did that. They brought in a lot of people coming from hedge funds. Perhaps they have said we have done what we can to recruit. It is time to take a different tactic. Guy how long can Goldman Sachs hold ond . An hold on . Heard from Goldman Sachs that they will concentrate on technology. They want to automate fixed income trading. Perhaps that will help. They have a tough road ahead. Volatility has not been there. Who is to say what catalyst will bring volatility back . That is hard to plan for. 50 hit mostly coming from commodities. That is a really tough quarter. Even when you have this windfall from tax cuts which before had been dominating the narrative, that could not help Goldman Sachs with earnings quarter round. Matt cyclicals have had a great start to the year. Yesterday Goldman Sachs and bank of america went down. For it look like this run cyclicals, this run for banking stocks has to take a pause here . Will be whatf it comes to the fed. There are macro forces which should be helping banks but it was such a messy quarter that a lot of that has been overshadowed and a lot of it is coming from idiosyncratic risk. It has been sending banking shares down at least yesterday. Things look like they should be favor whene banks you think about tax cuts, Interest Rates rising which it helps banks as well but if trade and revenue continues to look as poor as it does, and they are not having these tax cuts to help them in quarters to come, it is going to be very tough for these banks. Guy wrapping up the early burning seasons now in terms of valuation passing Goldman Sachs. What else can we expect from this reporting season, what is the takeaway . Dani Morgan Stanley has a lot of focus on wealth management. That should give them a boost. When we look at u. S. Earnings as a whole, we are at the second longest recovery in u. S. Modern history. It is very difficult to keep momentum going at this point. At the same time, you have u. S. Stocks trading at such rich valuations that there is little room for error. Investors are expecting a stellar quarter, really panicky when you have valuations 20 times earnings in the s p 500 so they are expecting perfection. Matt thanks very much. Covering the banks for us. We will continue to cover this up their u. S. Ap earnings and we will see how european stocks react at the open in 11 minutes time. We will take a look at some of the other stocks you will want to watch. Melrosesrejecting takeover offer. That the is saying that the offer undervalues the assets. We will discuss more. The open 10 minutes from now. This is bloomberg. Matt we are minutes away from the open. Lets get some of the stocks you need to watch in the first few days minutes of trading. Lets kick it off with ab foods. From thatu expect company today . Yesterday and all this year so far defensive stocks have not been doing well. Paul they came out with a trading statement. Key to that is the performance of primark. Now there their main growth engine. There is going to be some questions to ask when they speak to analysts later in the morning. Primarks firstquarter sales were up 7 . Sounds like a pretty good performance, what you would expect from primark. It is a low estimate around 10 . They give some indication of this, october was poor because of weather. Analysts already knew that. The statement does not give any other indication as to why those seals may have missed estimates. There is going to be some questions that need to be answered by them this morning. The stocks cooled down 3 . Guy that is incredibly tightly held stock. Lets dry draw a line between them. We have a lot of coffee shops in this country and whitbreads on the high street. Paul with whitbread this morning they said the tough high of shops are on the high street. Reflected in the like to like numbers. Time and this the will continue to be a challenge in the year ahead as well as inflation. It is a business with a lot of challenges. What you would expect for a company, this is a bellwether of consumer spending. Matt let me ask about countrywide. The London Property stocks company. We have a profit warning out of them. What is the story . Paul this is the unexpected news this morning. Countrywide said that theyre going to report profits that are below expectations. We thought the estimates were near 74 million pounds. The market clearly is not favoring them and the early calls on that one is we think they will be down around 20 . Guy a massive hit on countrywide. Thank you very much, paul jarvis, i was stocks editor joining us. You can follow the news from the stocks team. First go is what you should be doing to get on board without. A bunch of stocks going ex dividend. Gkn is rejecting the melrose story. And that could be a story that moves. The market open is next. This is bloomberg. Minutes to go until the start of trading here. What we are watching this morning. Keep an eye on the eurodollar. It has an effect on the stock market as well. The nikkei closing down. Oil is softening up. Yesterday, we saw a continuation of a rally in the United States. The spx going in a straight line. Where we are the expected to go in europe. We are going to be opening up higher. London looks like it will lag. Could be interesting. Matt will be talking about that later on. Lots of u. K. Stocks. Lets show you what the numbers look like. 8 00 in london. Up. Ftse 100 the expectation is we will see a stronger performance elsewhere. On, what keep an eye is happening with gkn. Ibex, trading up. Lets break it down. Solidly did this morning. Bidinancials are solidly this morning. Bid. H care is solidly a well bid market this morning. Matt we have almost 400 winners to only 100 losers on the stoxx 600. It is the strongest we have seen so far this year, right out of the gate. Take a look at my moves screen. Sap, and some of the other tech stocks gaining. Goldman sachs has upgraded European Software and european chipmakers. Up 2. 5 at the open. Sometimes it takes the german stocks a little longer to open up. You see asml up there. Take a look at the losers. Top. One at the i have these in order of index points. Taking the most off of the index. Movers, associated in any case that stock is down. E. On is on the move this morning. Cut its rating. It is interesting to see the german utilities. Focus on, i want to comments coming through here. Speaking of the bundesbank events. The eurodollar is trading at 122, it is setting a session high now. It has gone higher than that. Germany should focus on targeted investments. It is interesting considering the political narrative and backdrop we have at the moment. See anything matt they will both be there. Could be a little uncomfortable in that room in frankfurt as Christine Lagarde make comments about the german surplus. Germans are notorious for future planning, and they think that surplus is important for the next slowdown. Yesterday we heard a little bit. F that we have heard that a lot from these coalition talks. It will be interesting to hear manns comments today, and Christine Lagardes snack snapback. European stocks underway. We are in the green early. Hong kong added to their surge. Mark rich has joined us on set. We were hearing from vanguard earlier on suggesting they were a little choppy. What is your sense of the market right now. The way we have been thinking about markets the last couple of pillars,there are four the increase in the macro data has been supportive of that picture. The start of the earnings season looks ok. Are raising orange flags. Fundamentals are green. We see the increase in profitability. Sentiment is what we are paying the most attention to. ,e recognize this bull market more the british pervasive sentiment. We are doing more work on paying attention to come up what is it can help you in small tactical moves. What tends to happen is your attempted to sell and you never get back in at the right time. You never make enough added value. I wonder what you think about the industry groups. Today, for example, we see asml open up 2. 5 , and all of these tech stocks are doing well. What do you think about the tech sector in general in 2018 . So far this year they have done ok. 3. 8 . Not a huge piece of the stoxx 600 pie. Mark if we think about tech as a global sector, one of the interesting trends has been a consolidation in the sub industry sectors. It like memory, big data. You have seen consolidation and a cyclical pickup in demand on top of a secular pickup in demand, and stronger pricing power. We see a continuation of that this year. People get worried when tech does well because it reminds of the 1990s bubble. On valuation we dont see stretched valuations in this tech sector. Was hope,990s one this is based on reality. Guy Mark Richards joining us from j. P. Morgan Asset Management. The Real Estate Agent out this morning with numbers, and they are not good. The stock is trading down sharply on the back of this. We have a number of big moves this morning. Matt has been flagging what is happening with tech. I have a feeling this is the u. S. Countrywide, not the you cake countrywide. Not the u. K. Countrywide. We remember countrywide from the 2007 period. Up next, we will get a focus on what is happening with the banking sector. We have changes underway. Banks continue to be one area where europe can generate some performance. We will get a focus on what is happening. The ftse is up. London looks fantastic. This is bloomberg. Guy 12 minutes into the trading session, quite a bit of interesting stuff going on. A little focus in the retail space. One of the best performers on the stoxx 600 up 3 . Sales bounced back in the Holiday Shopping season. Four up 0. 5 rre 2. 9 . Space, gknthe retail down. It rejected the offer from now rose, but a statement has come out saying it undervalues the company. It says there was misleading elements in the melrose opera. The melrose offer. Barclays is cutting up to 100 senior staff in its Investment Bank as part of a division overhaul. The cuts will be evenly split between the u. S. And europe, and fall at the managing director and the director levels. The bosses are getting fired. The bank declined to comment. The stock more broadly about the banking sectors. Earnings with the u. S. Banks, and we look at the valuations with Investment Banks, u. S. Banks versus european banks. Mark richards at jp morgan Asset Management, what do you think . Bout the bank sector as we showed earlier, banks are doing well so far. Second only to the Auto Industry as talk performers in european stocks. Is it a good investment for 2018 . Mark there are three main aspects we look at the financial spec Financial Sector. The inflation outlook, the verage in the system, and how you cope within relation. What tends to happen is provisions come down. More inflation helps the sector because it is dealing with leverage and allows people with debts to pay off the debt more readily. We have seen the flattening of the yield curve, but what is more important for the banks is the maturity of their loans and the maturity of their financing. It is a threemonth to twoyear curve. That is been different in the last six to 12 months. The more important one is the steepening at the short front end of the curve. In europe, i wonder if this is where i will get my performance. Everybody who sits in the chair you are sitting in, which says europe is on a tear at the moment, and my alpha comes from european . Yes, european banks are going to be the source of outperformance in europe. Moves insitive regulation last year. That frees up and reduces uncertainty. Daddies could start to work in the market. Are seeing in europe is strong. Weekw some stories last that there were trouble in the italian banks. Matt i have a chart right now , and i know it has only been a handful of trading days in 2018, u. S. Banks in white. The euro stocks bank index in blue. In 2018 so far, european banks have outperformed. I wonder what we will see from the ecb this year. Do you expect that to change the bank picture at all . Yes, i think the ecb is in focus. What we have seen on the inflation front in europe, the inflation data has not moved materially. Nothing to write home about. We have seen data which they start to raise rates come in from the end of 2019. For them to shift more hawkish ishly, the euro strength is not particularly helpful is harder to see. A slight more hawkish shift and the last few months, it is heart to see expect it is hard to see expectations. This is a man who is at the hawkish end of the spectrum, but could be the next president the germans would like to see. , the more we me talk about it the less likely it is going to happen. Hear from ato number of people today. The euro is trading at session highs. We will talk about what is happening with apple. We will talk about the cash pile and what impact it could have on the market. Plenty more still to come. This is bloomberg. Welcome back to the european open. 21 minutes into the session, and we have stocks up across the board. Vocus sing in on one of the big stories out of the u. S. , probably one of the biggest tax bills of all time, apple says it will bring hundreds of billions of dollars overseas back to the 38 billion tax bill. By bloomberg gadfly columnist. Tim, who will win from this massive spending plan, another 30 billion investment in the next five years . The 30 billion is very interesting. Anyone in the business of making data centers will get good money out of that. It is something we would expect anyway. This is a company that has data centers. 10 billion over five years seems about reasonable. Another 5 billion is going to local manufacturers. We expect Companies Like corning to benefit from that. It is being escalated to 5 billion. From there, we will see attempts to lower overseas manufacturers to the United States to get them to set up operations. We will see more attempts to get other companies to do the same. Guy is this what we will get . When a giant like apple read plants its flag, presumably others follow . Tim yes, you would think so. Inle is the biggest name electronics in the United States. Amazon and google are in that business, but they are pretty much an asian name now. I dont think there will be a lot of foxconns lining up. They will be invited to submit proposals, but i think there is a lot of risk for any asian manufacturer who wants to set up shop in the United States. They could get money out of apple and tax breaks, but they have to be there for the long haul, and that might not be there. Thank you very much, tim culpan talking about this massive news. With Mark Richards, miltiasset global strategist, jp morgan Asset Management. Theyre more benefits to the tax bill than skeptics would like to admit early on. If apple is already planning billions of dollars in investment, now it will be 30 billion over five years, even if bonusese already giving to employees. Do you think this tax bill will be better for the u. S. Economy than we first thought . Mark it depends on what you mean by better. Without the fiscal policy changes, we are advancing into the later stages of the Business Cycle in the u. S. Up, consumertaking confidence is high. If you add that fiscal boost in, theyre going to spend some of the tax cuts boost in higher , and bonuses. That creates more pressure on the supply side. It may be better in terms of overall demand, but we have to view it in the context of inflationary pressures. What does that mean for inflation in the next six to 12 months . And what does that mean for the feds reaction . Theoretically a lot of this stuff is held overseas, but it is held in u. S. Dollars. Are they going to sell those assets . Mark one of the features of this Business Cycle has been short corporate profits. Those profits have been largely used to pay dividends but also increase cash balances. Those cash balances at been in treasuries. Paying those out in extra dividends, i think the bigger drivers of the bond market is what is happening to central boj, and the indiscriminate buyers. Guy stick around. This is bloomberg. Bloombergome back to european open. Valuablee worlds most company says it will pay a 38 billion tax bill as it repatriate hundreds of billions of dollars. Will the bond market be the loser . It is a no go for a gkn takeover. Accuse melrose of the chairman of the Worlds Largest the valuation is really high. Every bit of good news seems to be incorporated into the market prices right now. There is not a lot of room for bad news. Matt good morning. Welcome to Bloomberg Markets european open. Guy Goldman Sachs you are mentioning in the tech space, stocklk topperforming , technology is up by 0. 7 . A mixed report this morning from the retail space. Take a look what is happening with abs. There are a bunch of other stocks to think about. Down. Lecom space is vodafone is a stock to be aware of. Thereal estate sector, country white came as a surprise. Came as awide surprise. A fairly dismal update coming through. Lets get a first word news update. White House Press Secretary said President Trump will support the house and it should plan for temporary government funding ahead of the shutdown deadline. That gives paul ryan some additional clout as he tries to bring reluctant conservatives on board. Republican leaders are pressing ahead by temporary funding the government for four more weeks, but shutting out democrats. According to people familiar with the matter, Angela Merkels relation is coming under strain. There is still a chance they will meet for a brief conversation, though it is proving extremely difficult. Roller coaster Start Testing wild moves over the last 24 hours. Biggesttions took the point butits low bitcoin is still up 1000 from a year ago. Discussionsternal among policymakers raising the need to discuss policy normalization. The current Stimulus Program must stay unchanged. According to people familiar with talks, some think the change is natural given the improvement in the economy. Japansants to sweeten valid valentines day with chocolate cats. S. Chocolate kit kat the company struck a deal, giving it exclusive rights. Berry flavor that is sour and sweet. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Chinese gdp expanded faster than estimated last year, growing six point 9 . It marks its first full year. Cceleration since 2010 with a slowdown in retail sales dominate this year . Richards, miltiasset global strategist, jp morgan iset management, whenever read these numbers, they are so close to target, always barely beating what president xi laid out. I have to ask myself, are the numbers real . It doesnt matter that much. What do you think about the reporting out of china . Tok i think you are correct cast a little bit of dispersion over the gdp numbers. They would be in your top three chinese indicators. The way we are viewing china is that it is a balance between maintainingg commitments to doubling gdp i 2020. And announcing reforms necessary to improve the longterm trajectory of the economy. At the moment, we see that balance tilted. Moderatell gradually into next year, but not really we can to an extent that can affect our view of the region. Guy do i buy commodities . The minors have been trading. Do i buy the dollar . Myself around china in terms of the asian trade . How do i make it work for me in 2018 . Names wethe commodity have had this theme that there is increasing supply discipline. What we see in the australian economy, rate expectations are a andle bit too far advanced will probably be on hold for the next year at least. , we see reforms and supply discipline in china. The reforms going on within the Financial Sector are to target the joint stocks banks, manage Asset Management for some banks. On the other hand, retail sales rose 9. 4 . The expectation was for 10. 2 . Less than expected. Asset investment was up the 1990 nine, again of 7. 2 . How does the domestic economy fare in china . And how does that touch you as an investor . Mark the slight softness in retail sales is a bit of concern. It is in general keeping with our views that gradual moderation in the economy. When we take a step back and think about the transition underway in the chinese economy, in the past we would be skeptical about reform because the risk of social unrest, higher unemployment, but we see of late is the transition from a heady goods manufacturing to a , theservice focused Service Sector has been more labor intensive does not give you that concern about social unrest. The priorities government has in terms of financial stability, focusing on the environment, and improving the inequality within society, there is enough to keep people on track, to keep domestic growth roughly around trend. Slightly moderating from last year. Need to worry about a trade war with United States, and how do i price that in . Mark that gains headlines from time to time. Our base case is that both parties know a full on trade war is a net loss or both of them. ,here can be moves to preempt the stories we had last week about a source saying there was not fair value, that is an opening salvo in an anecdotal war. N it comes to the crunch, guy it affects pricing in the meantime. Top but it is not in the three drivers that would affect markets. Matt what is your take on how those assets will react to a dollar strengthening . That is what mark cudmore is saying. The consensus is for dollar softness, but what are you expecting . We can talk about strong global growth, industry consolidation, pricing power, but one of those key drivers is the path of the dollar. We see the dollar caught between two opposing forces. On one hand you have expectations of more fed hikes iss year against an ecb that moving more hawkish lee. Shly. Re hawkin longerterm we expect it to be depreciating. The thing about the fed raising rates, think about the fundamental strengththe thing, r external deficits, better domestic growth. The sensitivity is still high. Less than it would have been three or four years ago. Richards, miltiasset global strategist, jp morgan Asset Management, we are not quite done with him yet. He will join matt and i on bloomberg radio. Lets talk about the vanguard story. It is something, if it is too good to be true, it usually is. The pennsylvaniabased money manager spoke exclusively to bloombergs Tom Mackenzie about vanguards growth potential. It is not coke and pepsi. Market,0 of the u. S. We are only a couple Percentage Points on the overall market. I think there is quite a bit of opportunity for us to take our message. Wordofmouth, and the loyalty of clients is what has driven the growth. Who keepany investors putting more with us over time. Brandnew investors in many cases, and building relationships. Very strong 2017, at what point does it become irrational . I think we are getting close in the u. S. The valuation is high. Every bit of good news seems to be incorporated into the market prices right now. There is not a lot of room for bad news. Since 2007,t time we are actually looking at a situation where a balanced antfolio might outperform overall equity portfolio over 10 years. We know no one can predict what will happen in the next 12 months. Im sure the equity market will continue to skyrocket the next few months. Where we sit right now, we expect the next decade to be modest in the u. S. A little less so in europe. A little less so in asia. It is still overall lower. Willw do you think markets digest the expected fed rate hikes . Very carefully. I think they are built in at this point. The big thing you have to worry about, the factor that drives a pullback from the rate hikes, or an acceleration of the rate hikes. The thing to watch our wages. There is some upward pressure on wages. Hikes unexpectedly, you would see a pullback in the markets. The stock market is assuming it will be gradual. In terms of tax cuts in the u. S. , how are those cuts playing out for corporates . How will they spend that cash . It is too soon to see, but we are seeing companies doing some hiring. We are seeing companies talking about putting more money back. I think corporations are going to be thoughtful for the first time in many years where u. S. Firms feel like they are on even footing globally. You will see more investment. Will there be stock buybacks . Probably. My guess is you will see potential investment. What are your views on what we are seeing in cryptocurrencies . I think the Blockchain Technology that underlies the currencies is one of the most exciting developments in technology. There is all kinds of potential applications we are just beginning to talk about. The cryptocurrency trading going on worries me. There is a lot of leverage. There is a lot of speculation. An old investor told me early in my career, if something seems too good to be true, it probably is. Systemic,ink it is but it is a strong idiosyncratic risk. Matt that was vanguard groups chairman speaking with bloombergs Tom Mackenzie. They talked about crypto, lets get more on that subject. Ledger, has sold over a Million Units. These are hardware pieces. They announced this morning they would raise 75 million to grow the business. Eric has grown businesses before. Eric, thank you for joining us. That me ask you about ledger. Explain the business. How does this product work . Do you carry it around with you . Impossible to hack . What is the idea . Parts of the biggest crypto concerning cryptocurrency is security. You need a digital safe. Product, itrdware is impossible to penetrate. It is going to secure privately. Or physicala safe gold, you have a safe for bitcoin. You can keep it with you. What it does is keep your. Rivate key which caters to owners of cryptocurrencies. We have sold a Million Units in more than 165 countries. Matt what happens if i once bitcoin in a wallet since 2012, and have not been able to find the password. It is worth more money now than it was then. What happens in that case . If that happened with one of your wallets, is there no way to recover the loss . Devices have a pin code. If you lose the pin code, or the device, you will have a recovery sheet. Backup ofyou write a your bitcoin or cryptocurrency on a piece of paper. This piece of paper, you have to keep it safe in a vault. This way, as long as you have your recovery sheet, you will be fine. You will not lose any of your cryptocurrency. How many are you going to sell . Cryptocurrencies are a new market, a booming market, and difficult to forecast. Nevertheless, we plan to sell between 3 million to 6 Million Units next year. Volatility inge the space over the last six weeks. Sell more on the way up than the way down . Does the volatility we see in the cryptocurrencies have any meaningful impact . What me through the market feedback into your business looks like. Volatility,we see and especially when it is up, the more we think about cryptocurrencies in the media, and it creates more traffic on our website, and we sell more. The higher the price of the bitcoin, the higher the sales. Sometimes could give currencies not having the same volatility, we have a baseline which is high. In the last few weeks we have seen a decrease in the value of the currencies. The level of sales states quite high. Each time we have a lot of volatility or a price hike, it gives us a new baseline which is higher than the previous one. Matt the obvious question to ask right now, has the bitcoin bubble burst . 20,000. Approach in september we saw it go down below 10,000. A 50 drop in six weeks. Are you concerned the bubble has burst . Not really. In 2013he first bubble when we went from 1000 to 200. At the time everyone thought it was dead. We are seeing a high level of volatility, especially at the beginning of the year. Before the Chinese New Year we saw a lot of selloff. A lot of users are trying to sell to get money for the holidays. We can see that we have a strong baseline. Right now we are still trading over 10,000. We will see what will happen in the next week. We will see other corrections, lets not longterm, fromt all the Investment Banks, hedge funds, is going to flow into cryptocurrencies in the next month. We are going to see a lot of action. What do you expect on the regulatory front . This seems to be an area of the market is focused on more carefully. There will be more regulatory imposition. South korea seems to be on the front edge of this. Other Central Banks moving in line. Is this an area that could cause concern . How do you model future regulation . Regulation generally speaking is a good thing. Regarding ledger, we do not talk to regulators. We are selling security solutions. It is about infrastructure, so we are not talking to the and regulation does not affect us directly. We do not have risk due to regulation. We see more and more countries bending rules, and having the framework allowing to invest into cryptocurrencies. It will help the Global Markets trust,rward, to add more and in the longterm to have lower volatility because of more volume. Matt thank you so much for your time. Hardware crypto wallets that can hold any crypto on it. They just raised 75 million. Looking back into the equity market and our into the trade, lets go to nejra cehic. Todays record high in and i am also looking at the best performers in the session. , this is they effective tax rate we are talking about. Benefiting from one of credit from the reevaluation of tax liabilities. We are seeing the stock move on that. On the downside i am looking at countrywide, jumping the most since june, 2016. I thought it was worth highlighting. It is having a beat through to other real estate stocks. Thank you, nejra cehic. Lets talk about the ceo of Qatar National bank. Arabiandoff with saudi will last forever, he says. Largest lenders is moving on with his expansion strategy. The strategy is the same. No change in our growth targets. Look to 2020. Hong kong, looking to establish operations there. We already operate in india. Singapore is becoming our asian hub. Islamicxpanding into banking. We remain focused on our strategy for 2020. Diversification is one of the issues that is important for us. We will continue our it diversification. Yousef would you say it is more difficult to deal with the realities of the gulf crisis . Would you say the longer this drags on, the more difficult it will become for lenders like you to deal with . Actually, the contrary. We are adjusting to the new norms. We are operating our business is that this crisis will continue forever. Is business as usual for us. We are operating our targets, our risk management, our growth as if thish as if crisis will continue forever. Guy that was Qatar National banks ceo speaking to yousef gamal eldin. Lets talk about the stock of the hour. I always have a strange affinity for french supermarkets. You can see the righthand panel, it is trading up really strongly. Jeffries is saying the revenue line is better. It is may looking to offload its china business. Trading really strongly. Matt i will point out it is a big move. I was thinking in pity on would be the stock of the hour, but ours move is a good stock to watch. We are going to radio. Surveillance is up next. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. World most of valuable company says that it will pay a 38 billion tax bill. The president praises the move. Chinas gdp picks up for the First Time Since 2010. And getting real on the rally. The chairman of vanguard ying thatinvestors, sa he sees a slowdown after years of return. Good morning everyone and welcome to bloomberg surveillance